Japan’s finance ministry to use foreign reserves for ESG investments

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Japanese national flags fly in front of buildings in the business district of Tokyo in Japan, February 22, 2016. REUTERS/Toru Hanai/Files
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TOKYO (Businesshala) – Japan’s finance ministry will begin using foreign reserves to buy securities that meet environmental, social and governance (ESG) criteria, it said on Friday for investors focused on such issues. joined the global tide.

Japan’s foreign reserves of $1.4 trillion are held mainly by the Ministry of Finance (MOF) and are believed to consist mainly of the US dollar due to past interventions in foreign exchange markets to weaken the yen.

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For years, MOF has been trying to diversify into the makeup of the world’s second largest reserves after China.

A MoF official said the latest plan would be implemented at the earliest, making Japan the first country in the Group of Seven (G7) countries to use foreign reserves for ESG investments.

“By following the core principle of ensuring safety, liquidity and profitability, we will make investments keeping in mind environmental, social and governance (issues),” MoF said in a statement. Stores.

The move comes as some major central banks also use their institutional weighting to help combat global warming.

The Bank of Japan said in July that it would start buying green bonds using its foreign reserves to boost global investment in activities aimed at combating climate change.

The MOF’s special account that manages foreign reserves generates profits from managing the reserves, which often become sources of funding for supplemental budgets.

Reporting by Tetsushi Kajimoto; Editing by Mark Potter

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